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Annual Federal Deficit Will Hit $1 Trillion This Month--With 3-Plus Months to Go in Fiscal Year

June 7, 2010 - 2:03 PM

With the federal government now&nbsp;borrowing an average of&nbsp;$3.9 billion a day, the federal&nbsp;deficit is set to hit $1 trillion for&nbsp;fiscal 2010&nbsp;by June 16, with three-and-a-half months left in the fiscal year.

(CNSNews.com) – With the federal government borrowing an average of $3.9 billion per day day, the annual federal deficit is set to exceed $1 trillion by June 16, with three-and-a-half months still to go in fiscal year 2010, according to data released Friday by the Congressional Budget Office (CBO).

The Office of Management and Budget is projecting that this year’s federal deficit will be 10.6 percent of GDP. That would mark the first time since World War II that the federal government has run a deficit that reached double digits as a share of GDP.

In its monthly budget review for May, the CBO, the non-partisan accounting agency for the U.S. Congress, revealed that the federal government had run up a deficit of $142 billion for the month, sending the total budget deficit for fiscal 2010 to $941 billion for the first 8 months of the fiscal year. The federal fiscal year runs from October 1 to September 30.

Given that the federal government took on $941 billion in new debt in the 243 days from Oct. 1, 2009 until May 31, 2010, that means that the Treasury has been borrowing during this fiscal year at an average rate of $3.9 billion per day. At that rate, the federal deficit is on track to exceed $1 trillion on June 16.

This year's projected deficit of $1.55 trillion is higher than the $1.41 trillion deficit for fiscal 2009, which was the largest deficit in dollar terms in the history of the country. The 2009 deficit, however, was supposed to be an historical anomaly because of extraordinary one-time spending on the Troubled Asset Relief Program to bailout the financial industry and the $787 stimulus law enacted to help spur the economy out of recession.

The total national debt topped $13 trillion in late May and will overtake GDP in 2012, according to the International Monetary Fund .

The table below shows the federal surplus or deficit in real dollars and as a percentage of GDP from 1940 to 2010. (Source: Office of Management and Budget, Historical Tables, 1.3.)